The economic impact of the COVID-19 pandemic has led Thailand’s Ministry of Finance, with the approval of the cabinet, to implement tax and non-tax relief measures to aid the general public, workers, and entrepreneurs. The tax relief measures, two phases of which have been released to date, are detailed below.
Phase I Tax Relief Measures – March 10, 2020
Reduction of withholding tax rates. This measure, which is already in effect, reduces withholding tax from 3% to 1.5% for the following types of payments made between April 1, 2020, and September 30, 2020:
- Income from service fees, commission fees, and other income under section 40 (2) of the Revenue Code, paid to companies or juristic partnerships in Thailand.
- Income from payments for goodwill, copyrights, and other rights under section 40 (3) of the Revenue Code, paid to companies or juristic partnerships in Thailand.
- Income from professional legal fees, audit fees, and other income under section 40 (6) and (7) of the Revenue Code, paid to persons liable to Thai personal income tax or corporate income tax.
- Income from payments in the nature of hire-of-work service, awards, rebate, or sales promotion, and any services other than entertainment performance, advertisement, non-life insurance premiums, and transportation fees, excluding payments for hotel services, restaurant service charges, and life-insurance premiums, all falling under section 40 (8) of the Revenue Code, paid to persons liable to Thai personal income tax or corporate income tax.
For payments of the above types made between October 1, 2020, and December 31, 2021, the withholding tax rates will be reduced from 3% to 2% for e-payments and e-withholding tax only.
Payments to foundations or associations that carry out business, as well as those announced by the government according to Section 47 (7) (b), are not be eligible for any of these reductions.
Increased tax deductibility for SMEs’ loan interest. SMEs that enrolled in the Soft Loan program for COVID-19 and committed to the “single account” program can claim 150% of actual loan interest paid from April 1 to December 31, 2020, as tax-deductible expenses.
Increased tax deductibility for SMEs’ salary costs. SMEs can claim 300% of actual salary costs paid to qualifying employees from April to July, 2020, as tax-deductible expenses.
Acceleration of the VAT refund process. All domestic business operators classified as “good exporters” will receive any VAT refund owed within 15 days of filing VAT online, or 45 days of filing VAT manually.
Phase II Tax Relief Measures – March 24, 2020
Personal Income Tax
PIT filing extension. The deadline for submission of 2019 Personal Income Tax returns is extended from June 30, 2020, to August 31, 2020. This measure is already in effect.
Increased health insurance allowance. For the 2020 tax year, the tax allowance cap on health insurance premiums paid is increased from THB 15,000 to THB 25,000 (subject to an aggregate cap of THB 100,000 when combined with life and annuity insurance premiums).
Exemption for special pay to medical personnel. For eligible medical and public health personnel involved in the prevention or treatment of COVID-19, Certain types of income earned in 2020, such as risk compensation, are exempted from income tax.
Corporate Income Tax
Filing extension for non-listed companies (already in effect).
- For the 2019 fiscal period, Form PND 50 and Transfer Pricing Disclosure Form are now due on August 31, 2020, for companies that were due to file it between April 1 and August 30, 2020; and
- For the 2020 fiscal period, Form PND 51 is now due on September 30, 2020, for companies that were due to file it between July 1 and 29 September, 2020.
Extension for tax exemption filing with the Board of Investment (BOI). All BOI-promoted companies are granted an extension, to July 31, or at least 30 days in advance of the above extended deadline for PND 50 submission, to apply for corporate income tax exemption.
Other Tax Relief Measures
Extension of other tax filing for affected business operators. Business operators who have to close a branch or head office as a result of a government order have been automatically granted extensions to file other tax returns, with immediate effect, including:
- Monthly VAT returns (Form PP.30) and monthly SBT returns (Form PorTor.40) for March and April 2020, which are now due on May 23, 2020;
- Other tax returns (e.g. PND.1, PND.53, PND.54, PP.36) for March and April, which are now due on May 15, 2020; and
- Instruments subject to stamp duty that have to be paid in cash, during April 1 to May 15, 2020, are now due to pay stamp duty on May 15, 2020.
Extensions for specific business tax payments are not applicable to specific business tax arising out of the transfer of immovable property.
Excise tax filing extension for certain businesses.
- From April to June, 2020, oil and oil-related products business operators can file and pay excise tax within 15 days (up from the usual requirement of 10 days) from the end of the month that the goods were sent from the factory or bonded warehouse.
- Operators of entertainment establishments, such as bars, pub, nightclubs, etc., can file and pay excise tax by June 15, 2020. (already in effect)
Customs duty exemption for materials imported to combat COVID-19. Import duties are exempted on goods imported by September 30, 2020, for the treatment, diagnosis, or prevention of COVID-19.
Import VAT exemption for materials imported to combat COVID-19 and donated to public hospitals, government agencies or public charity, between March 1, 2020 and February 28, 2021.
Tax Relief for Debt Restructuring by Non-bank Creditors
Several tax relief measures support debt restructuring by creditors who are non-financial institutions (e.g., credit card issuers, personal loan business operators, nano- and pico-finance business operators, hire purchase, leasing business operators, etc.) including the following:
- For debtors, exemption from income tax on forgiven debts.
- For debtors and creditors, exemption from income tax, VAT, specific business tax, and stamp duty imposed on transfers of assets, sale of goods, or provision of services, and any instrument executed in relation to debt restructuring.
- For debtors, exemption from income tax, VAT, specific business tax, and stamp duty imposed on transfers of immoveable property collateral to a third party under circumstances prescribed by the director-general of the Revenue Department.
Some of the above measures require further issuance of official announcements or ministerial regulations to take effect. As such, the details of these measures may change. Tilleke & Gibbins will keep you updated as the situation develops.